New Mexico State Investment Council commits to Affinity Fund IV
New Mexico State Investment Council (NMSIC) has agreed to invest up to $75 million in Affinity Equity Partners’ fourth pan-Asia fund. The vehicle reached a first close of $1.5 billion in early March and has a hard cap of $3.5 billion.
A proposal to commit between $50 million and $75 million to Affinity Asia Pacific Fund IV was approved by NMSIC in late March.
The council manages New Mexico's $16.5 billion permanent endowment as well as investments for 17 other government clients. As of September 2012, private equity accounted for 9.5% of the portfolio, with a further 4.5% in real estate and 7.2% in absolute returns.
Affinity reached its first close after only about five months, receiving commitments from about 20 LPs, most of them existing investors. The LP base is broad, taking in pension funds, sovereign wealth funds, fund-of-funds and family offices, among others. MVision is serving as placement agent.
Investors that have disclosed involvement include Washington State Investment Board, which put in $300 million, three times its commitment to Affinity's third fund, and Maine Public Employees' Retirement System, which has committed $30 million.
Affinity Asia Pacific Fund III took about four months to reach a final close of $2.8 billion in 2007. The LP base featured the likes of California Public Employees' Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS). Affinity was created in 2002 following a spin-out from UBS' Asia private equity business led by K.Y. Tang.
The fundraising environment in Asia is tightening, with $46.8 billion raised in 2012, down 35.8% year-on-year and the lowest annual total since 2009.
Several buyout firms are currently in the market raising Asia funds, besides Affinity. KKR is expected to announce a final close of $6 billion on second pan-regional vehicle imminently, while RRJ Capital has reportedly raised $3.5 billion for its second fund. The Carlyle Group is seeking $3.5 billion and TPG Capital is looking for up to $4 billion, while both MBK Partners and Morgan Stanley Private Equity Asia have reached first closes as they work towards targets of $2.25 billion and $1.5 billion, respectively.
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